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Supporters of Lady Thatcher have unveiled plans to honour her in the manner of a US president by creating a library and museum in her memory.

The Cherish Freedom Trust has announced that it wants the institution, which will be based in central London, "to bring Margaret Thatcher's legacy, values and achievements to life for the wider public from around the world".

Cabinet ministers and other senior Tories have expressed their support for the scheme, which is due to start fundraising on a large scale after Thatcher's funeral on Wednesday.

All former US presidents set up a library in their name to house their papers and honour their legacy. In the UK, although some former prime ministers have been commemorated in museums or at their former homes, none has been honoured with the equivalent of a US-style presidential library.

The plans emerged as Lord Prescott, the Labour former deputy prime minister, used his column in the Sunday Mirror to criticise the decision to pay for Thatcher's funeral from public funds.

Prescott said the taxpayer should not foot the bill because it was simply a "political propaganda exercise" for the Tory party. I despised everything she stood for. She may have been a woman, but in her policies she showed no compassion to the sick, needy and the desperate," he wrote.

"Even in death, she is spinning from her grave. She claimed she never wanted a state funeral, but she planned to give herself the same ceremonial one as the Queen Mother.

"And her 'children', the out-of-touch Tory boys Cameron and Osborne, are getting YOU to foot the £10m bill for the biggest political propaganda exercise this country has ever seen.

"Thatcher split this country, north and south, the haves and have nots, 'one of us' or 'the enemy within'. This country paid enough thanks to that woman. So why the hell should we continue to pay now she's dead?"

He suggested the 13,000 millionaires who had each received a £100,000 tax cut as a result of the government's reduction in the top rate of tax should instead each contribute £770 to pay for it. "Privatise her funeral. It would be a fitting tribute," he wrote.

The bishop of Grantham, the Right Rev Tim Ellis, has also criticised the amount being spent on Thatcher's funeral. "In a context where there is great ill feeling about her legacy, we have a situation where we seem to be expecting the nation to glorify that with a £10m funeral, asking for trouble," he said in an interview with the BBC.

More than 2,000 people will attend the funeral. But they will not include Sally Bercow, the Labour-supporting wife of the Commons Speaker John Bercow and a critic of Thatcher in the past, who has reportedly decided not to attend.

With the argument over her legacy continuing, Thatcher's supporters are keen to seize the moment to create a permanent memorial to her political ideals. Conor Burns, a Conservative MP who was particularly close to Thatcher, told Sky News on Sunday that the proposed library and museum would keep her ideas alive for a new generation.

"She was always much more interested in the future than the past, and she was interested in the battle of ideas," he said. "And this idea, which is developing, is one that would have young people being exposed to her ideas and her values, and how potentially if she was starting again how those values would inform the challenges of the next 30 years."

The Cherish Freedom Trust has reportedly secured pledges worth £1m for what the Margaret Thatcher Library and Museum and hopes to raise £15m. The idea is being championed by Donal Blaney, chief executive of the Thatcherite Conservative Way Forward group, who was inspired by a visit to the Ronald Reagan library in California.

"The Margaret Thatcher Library and Museum will contain artefacts from the Thatcher era along with a state-of-the-art education centre and exhibit gallery for young people from around the world interested in public service," the trust says on its website. "The Thatcher Library will work to honour Margaret Thatcher's remarkable life and achievements and is the defining legacy project in her memory."

"The library will focus on public outreach, working with teachers and lecturers in primary and secondary schools and in colleges of higher and further education throughout the United Kingdom, especially in challenging communities, so that the next generation receives a truly balanced economic, political and historical education."

Senior Tories who have pledged their support include Eric Pickles, the communities secretary, Patrick McLoughlin, the transport secretary, David Jones, the Welsh secretary, Liam Fox, the former defence secretary, and Lord Tebbit, the former Conservative chairman.

"The establishment of a Margaret Thatcher library in Westminster under the leadership of Conservative Way Forward, to carry forward the ideals and unfinished work of Margaret Thatcher, is to be welcomed," said Tebbit.